Free Enterprise, Buckley Style

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The SEC cracks down on a family's business practices

The genteel Buckley clan of fashionable rural Connecticut has long championed free enterprise and political conservatism with considerable charm, commendable wit and decided moral convictions. But the Securities and Exchange Commission, after a 3½-year investigation of Buckley-controlled oil and gas companies, last week portrayed the family's own business practices as unethical and even unlawful. In effect, it accused the companies of having defrauded stockholders to feather the family's nest.

In a consent decree filed in a federal district court in Washington, D.C., officers of the Buckley firms neither denied nor admitted having violated securities laws. But they did agree not to do in the future what the SEC contends they had done in the past. They also agreed to reimburse parties who the SEC claims had been defrauded or misled and relinquished oil and gas royalties that were deemed excessive. The cost will be about $800,000, an amount viewed by some experts on securities investigations as a mere slap on the wrist.

The most illustrious Buckleys were not named in the 43-page civil complaint. William F. Buckley Jr., 55, while profiting as a shareholder in the family enterprises, was not an officer of any of the involved corporations. The erudite TV interviewer, columnist and editor of the National Review had been accused of civil fraud by the SEC in a wholly separate action in 1979 and, without conceding any culpability, had agreed not to act as an officer or director of any public corporation for five years. Also unnamed was James Buckley, 58, the former New York Senator, now Under Secretary of State for Security Assistance. Although he had been active in the family businesses at the time some of the alleged violations occurred, he had severed his formal business relationships while holding public office. He is a defendant, however, in multimillion-dollar civil suits by shareholders who say they were defrauded.

The relatively unknown John Buckley, 61, the eldest brother of William and James, is one of three Buckley business associates cited in the complaint. John has devoted his career to carrying on the enterprises that grew out of the lucrative Venezuelan oil ventures of the family patriarch, William Sr., who died in 1958. Also cited by the SEC were Benjamin Heath, 67, widower of one of the elder Buckley's daughters, and C. Dean Reasoner, a Washington lawyer who had long helped manage the Buckley businesses.

The specific allegations are highly technical. They revolve around actions of the Catawba Corp., a privately owned company created by William Sr. partly as a way to funnel his millions (one published estimate, disputed by the Buckleys as too high, is $170 million) to his ten children. Each inherited 9.8% of the firm's stock. The only non-family shareholder is Reasoner, who holds 2%. Catawba owned no mineral or petroleum lands of its own. But it controlled six other publicly owned corporations.

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